Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Ye' Olde Barrel Shop sells oak barrels to a local winery. The Master Cooper would like to reduce her oak lumber inventory by determining the

Ye' Olde Barrel Shop sells oak barrels to a local winery. The Master Cooper would like to reduce her oak lumber inventory by determining the optimal number of oak boards to order. The annual demand averages 10,125 boards and the order cost is $24.00 per order. Holding cost is estimated to be 15%. The purchase cost of each board is $8.00. The standard deviation of daily demand is 10 boards. The standard deviation of lead time is 1.5 days. Assume 260 days in the year and an average lead-time of 6 days.

I found the EOQ already but I have a different question which says:

If a service level of 90% is desired during the reorder interval, what is the statistical reorder point?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To determine the statistical reorder point ROP for Ye Olde Barrel Shop given a desired service level ... blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting Information for Decision-Making and Strategy Execution

Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young

6th Edition

137024975, 978-0137024971

More Books

Students also viewed these General Management questions

Question

Am I expecting too much from other people?

Answered: 1 week ago